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13.4.1. Main Rules

Definition of Related Parties

Related parties are defined as those with an associated relationship or those that are directly or indirectly controlled by the other, as well as one having control over the others board of directors.

Related parties are further defined under Taiwan's transfer pricing rules. The following provides an overview (non-exhaustive) of the conditions under which parties are deemed related under the rules:

  • One enterprise, or a third party, directly or indirectly holds 20% or more of the total issued and outstanding voting shares or capital stock of the other, or both enterprises
  • Half or more of the executive shareholders or directors of one enterprise are the same as those of the other
  • The chairman, general manager, or equivalent superiors of each enterprise are the same, or are related as spouses, or blood relatives to the second degree
  • The enterprise is the branch office within Taiwan of a business whose head office and other branches of such head office are located outside Taiwan or a business whose head office is within Taiwan and its branch offices are outside Taiwan
  • One enterprise directly or indirectly controls the personnel, finance or business operation of the other
  • The enterprises have entered into a joint venture agreement

Transfer pricing methods

The acceptable transfer pricing methods include:

  • comparable uncontrolled price,
  • resale price,
  • cost plus,
  • comparable profits,
  • profit split
  • other methods approved by the tax authorities

Taiwan tax authorities have not set a preferred method.

Use and availability of comparable information

Taiwan tax authorities have not provided any requirements on which comparable information can be used. While the tax authorities prefer that local Taiwan comparables be used by Taiwan companies, foreign comparables are also accepted.


When submitting an annual corporate income tax return, an enterprise must make note if contemporaneous transfer pricing documentation is ready, provide details of any advanced pricing agreement that has been signed, and disclose information on related parties and transactions with the return.

The information provided must be signed off on by the responsible person and chief financial person of the enterprises, guaranteeing the completeness and accuracy of the information disclosed and includes:

  • The organizational structure
  • The name of related parties and their financial information, including:
    • total revenues
    • gross margins
    • operating margins
    • net margins
  • The types of related-party transactions
  • The related-party transaction amounts